Opportunities abound for making life insurance an executive perk
Article Abstract:
Some forms of life insurance are highly suitable as components of executive compensation schemes. Companies offering these to their officials should carefully consider tax implications when assessing the true cost and benefit of life insurance coverage. Sec 101(a)(1) indicates that life insurance proceeds are excluded from taxable income, except when the policy is transferred for valuable consideration. The exclusion when such transfer is made is limited to the actual value of the consideration paid, in addition to the premiums or other amounts that the transferee eventually pays. Premium payments on personally owned policies are considered personal expenses and are thus non-deductible. However, Sec 162 provides that an employer-paid premium for employee life insurance can be deducted by the employer as an ordinary and necessary business expense. Provisions on group-term life insurance and split-dollar insurance are discussed.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1998
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Estate planning for IRA and qualified plan distributions
Article Abstract:
The spouse who survives a partner's death receives individual retirement account (IRA) and qualified retirement plan distributions without being exposed to any estate tax because of the marital deduction. However, the departed spouse's unified credit is left unused except when the estate has sufficient other assets that are not qualified for the deduction. Fortunately, proper estate planning can result in the use of IRA and qualified plan benefits to exploit the unified credit of the decedent. Taxpayers who intend to create estate plans using IRAs or qualified to take advantage of the unified credit or marital deduction should understand private letter rulings, which are based on Proposed Regulations. These indicate the stand of IRS regarding such schemes. Guidelines are presented.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1996
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Real estate investment opportunities are now more appealing for qualified plans
Article Abstract:
Real estate investments have become attractive for qualified retirement plans. The actual investment can be done directly by the plan from pooled accounts or individual 404(c) participants can purchase interests. The definition of fiduciary duties is broad and the penalties for misconduct are severe so as to protect the plan participants. In order to qualify as 404(c), plan participants must have the opportunity to give instructions, there must be several investment alternatives including an insured interest bearing deposit and a pooled investment fund, and there must be an independent fiduciary. There are a series of prohibited transactions involving disqualified persons.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1989
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